TAXPAYERS LOSE $1,300,000,000 IN CHRYSLER BAILOUT
As government wraps up auto bailouts, Treasury says it likely lost $1.3 billion on Chrysler deal.
NEW YORK (CNNMoney) — U.S. taxpayers likely lost $1.3 billion in the government bailout of Chrysler, the Treasury Department announced Thursday.
The government recently sold its remaining 6% stake in the company to Italian automaker Fiat, wrapping up the 2009 auto bailouts that were part of TARP.
Fiat paid the Treasury a total of $560 million for the remaining shares, as well as rights to shares held by the United Auto Workers retiree trust.
Originally, the government committed a total of $12.5 billion to the struggling automaker, Old Chrysler and Chrysler Group. Of those funds, $11.2 billion has been returned through principal repayments, interest and cancelled commitments, the Treasury said. Chrysler paid back $5.1 billion in loans in May.
Even though that means $1.3 billion will not be recovered, the Treasury called it a “major accomplishment.”
“With today’s closing, the US government has exited its investment in Chrysler at least six years earlier than expected,” Tim Massad, Treasury assistant secretary for financial stability said in a release.
As part of the loan agreement, Chrysler was given until 2017 to return the bailout funds. If it had taken the full term, the interest accrued on the loans would have significantly reduced the government’s losses.